Losing the war against poverty?

Dec 31, 2009, 02.21am IST

By R Gaiha & Vani Kulkarni

If we go by the number of expert groups constituted in recent years to re-examine the methodology of conducting BPL census and to assess poverty, it is tempting to conclude that all is not well with the poor. While official estimates are self-congratulatory in portraying a significant reduction in poverty over the decade 1993-2004-from about 37% to over 28% — as a direct consequence of the liberalisation of the Indian economy and the concomitant growth acceleration, the expert groups are at pains to underplay or steer clear of the implications of a marked decline in calorie intake over the period 1983-2004. A recent analysis byDeaton A and J Dreze (2009) 'Food and Nutrition in India: Facts and Interpretations', EPW, Vol XLIV, No. 7) shows that the decline in total calories' intake is more or less the same for the rich and poor. But cereal calories decline is much faster among the rich. In fact, per capita calorie intake has fallen at all levels of per capita household expenditure. Why people at higher expenditure levels have reduced their consumption of calories over time is perhaps not so hard to understand but why those at the lower end of the expenditure have done so is intriguing.

A somewhat stunning result is that if we go by the norms of per capita calorie norms of 2,100 for urban areas and 2,400 for the rural, the proportions of calorie deficient populations in the urban and rural areas have risen over the period 1993-2004 — from about 58% to about 64% in urban areas, and from about 71% to about 80% in rural areas. As a result, at the all-India level, the calorie deficient population rose from about 68% to about 76%. If these figures tell a story of considerable worsening of nutritional deprivation over a period of comprehensive macro-policy reforms and accelerated growth, it is also a story of abysmal failure of anti-poverty programmes to correct nutritional deprivation and inequity.

While there is no dearth of conjectures — an important one being that calorie requirements may have gone down because of better access to drinking water, transportation and last but not least improved epidemiological environment with less exposure to disease and infections — they are just that without empirical validation. A complementary explanation resting on changes in food preferences that involve emulation of consumption patterns of the rich and influence of advertisements ought not to be overlooked in understanding this calorie decline puzzle as incomes have risen.

Unmindful of this puzzle, a valiant effort by two World Bank researchers (Datt G and M Ravallion, 2009) 'Has India's Economic Growth Become More Pro-Poor in the Wake of Economic Reforms?';, Washington DC: Policy Research Working Paper 5103, October) produces a dazzling array of statistical evidence to establish that there has been a trend decline in different indices of poverty (i.e., the head-count ratio, the poverty gap index and the squared poverty index gap) over a period of 50 years, including 15 years of economic reforms. Both urban and rural poverty measures have declined. The more interesting results, however, relate to the comparison of the pre-reform (until 1991) and post reform periods (up to 2005-06). These include a faster reduction in the head-count ratio in the latter.

Other measures of poverty that take into account intensity of poverty (the poverty gap index) and greater valuation of the gains of the poorest (the squared poverty gap index) do not register larger reductions in the post-reform phase. But the effects of changes in the composition of growth on poverty are dramatic. In the period up to 1991, the main driving force for overall reduction in poverty was rural economic growth. Moreover, urban growth reduced urban poverty while rural growth reduced rural poverty.

However, in the post-reform phase, the more rapid rise in urban living standards has not just reduced urban poverty but also replaced rural economic growth as the main driver of reduction in overall poverty. Sluggish rural growth, by contrast, has benefited the deprived sections in rural areas but without any spillovers to the urban population. Urban growth, on the other hand, has alleviated not just urban poverty but also rural.

Unfortunately, as the poverty estimates are not anchored to nutritional adequacy, the battery of statistical tests and their results do not help resolve the divergence between reduction in poverty and the consistent rise in calorie deficient population. Besides, the overemphatic view that urban growth is driving both rural and national poverty despite accentuation of expenditure inequality is intriguing in the absence of a clear articulation of the mechanisms through which these effects are transmitted. In brief, if the war against poverty is judged in terms of nutritional adequacy, the prospects of winning it are daunting.

(Raghav Gaiha is Professor of Public Policy, Faculty of Management Studies, University of Delhi; Vani S Kulkarni is Senior Lecturer, South Asian Studies, Yale University)